A growing number of state governments are in the throes of a fiscal meltdown. Thirty-one states now face a combined budget deficit estimated at more than $40 billion stemming from slowing tax revenues, according to the National Conference on State Legislatures.
Many in the mainstream media have been content to end this “doom-and-gloom” tale here, but to do so does not do proper justice to the actual truth.
Tax revenues have slowed this fiscal year as many Americans have had to tighten their belts and cut back on their spending. However, this is not a practice mirrored by those in government; in fact, government has been on a spending binge for the last several years.
During the second quarter of 2008, state and local government spending rose 7.8 percent as compared to the same time last year, while tax revenue only increased 2.5 percent. In fact, state and local governments are on pace to spend more than $2 trillion in 2008 — nearly 15 percent of the nation’s GDP.
Driving the surge in states spending has been the creation of new public sector jobs, better compensation packages for government employees, and explosive growth in health care entitlements (read: Medicaid).
It’s time our elected officials learned the art of fiscal discipline. Hard-earned taxpayer dollars do not exist for the purposes of growing the public sector, nor is it very prudent for government to place such a heavy burden on the private sector — as doing so has the rather unfortunate consequence of hurting their money supply.
– James Quintero